Download The Social History of an American Depression, 1837

The Social History of an American Depression, 1837-1843
Samuel Rezneck
The American Historical Review, Vol. 40, No. 4. (Jul., 1935), pp. 662-687.
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THE SOCIAL HISTORY O F A N AMERICAN DEPRESSION,
1837-1843
THEyear 1835 was once characterized as the most prosperous the
United States had ever known. To Harriet Martineau it seemed "as if
the commercial credit of New York could stand any shock short of an
earthquake", since it had recovered so rapidly from the losses of the
Great Fire in that year? Within two years, however, not only New
York but the whole country was convulsed by a shock as devastating as
any earthquake could have been. Its depressing effects were felt for
several years, and even 1843 was described as "one of the gloomiest years
in our industrial history". Between 1837 and 1843 American society
was passing through the deep hollow of a great economic cycle, and the
air became heavy with doubt and distress. Contemporary opinion regarded it as no mere "pressure in the money market", but, on the contrary, as "a national pay day. The Nation has been drawing on the
Future, and the Future dishonors the draft. The forcing process is then
applied, widespread ruin is the result, and a long period of paralysis
ensues."
As early as 1840 the estimated losses due to depression were added
up to a total of six billion dollars, but even more important were those
losses incapable of measurement, as one writer pointed out:
Let every individual calculate for himself what he, personally, has lost,
what chances have been sacrificed by him, what he might have done, and what
he might have been, if the prosperity of the country had not been arrested. . . .
And before prosperity was restored, he predicted a "reckoning of misfortune . . . sufficiently a ~ t o u n d i n ~ " . ~
Depression came quickly and catastrophically, ushered in by panic;
but there had been ample warning. Already in April, 1836, Niles had
sounded 'the alarm, which was repeated in succeeding months, as disaster
approached. The notes of warning alternated, however, with the call
1
'37 and '57: a Brief Popular Account of all the Financial Panics (New York, 1857),
p. 16; A. M. Sakolski, The Great American Land Bubble (New York, 1g32), pp. 232 ff.;
Harriet Martineau, Society in America (New York, I 837), 11, 270, 274.
2 Arthur H. Cole, "Wholesale Prices in the United States", The Review of Economic
Statistics, VIII (Apr., 1926), 76 ff.; also "Statistical Background of the Crisis Period",
ibid., X (Nov., 1gz8), 191; '37 and '57, p. I ; Calvin Colton. The Iunios Tracts (New
York, 1 8 4 4 ) ~no. 11, p. 16.
662 Social History of an American Depression
663
to renewed confidence in the continuance of the era of universal prosperity. Even in the midst of the general gloom and panic during the
early months of 1837, the wish fathered the thought that the worst would
soon be over. It was "now time for people to thank God and take courage. Down with the panic makers, and down with the prevalent distrust.. . A bright sun will soon dispel the remaining darkness, and days
of prosperity and glory will be ours." Two years later, Greeley was still
mourning over the "corpse of poor, defunct Speculation" as the unfortunate victim of undeserved lander.^
The collapse of business and banking, early in 1837, was, however,
only the beginning of a long and severe process of purgation. The purging extended beyond the complicated and congested mass of credits and
debits which was the major proof of preceding prosperity. Every class
in the community was affected, and economic interests were deeply
stirred. As distress spread, political strife became embittered. Social
thought, as well as public sentiment, came under the whiplash of depression. The whole pattern of American life thus mirrored the prevailing mood and state of depression.
The propertied classes felt the immediate pinch of the general depreciation of values, and were especially articulate in voicing their grievances. Their plight is recorded poignantly, year after year, in the diary
of a man like Philip Hone, merchant, mayor, and bon vivant of New
York. During 1838 he wrote that half his friends were, like himself,
deeply in debt, with no prospect of getting out. A year later, Hone reported that he was now out of debt, but at the cost of two thirds of his
fortune. Living was high, and Hone wondered "how the poor man
manages to get a dinner for his family". In closing a volume of his diary,
in June, 1840, he grieved that he had three grown sons out of work.
"Business of all kinds is completely at a stand . . .and the whole body
politic sick and infirm, and calling aloud for a remedy". H e took comfort chiefly in the fact that a new national administration was in sight.4
.
Niles' Register, Apr. ,23, May 14, 1836; Apr. 8, 1837; A Collection of the Political
W k i n g s of William Leggett, Theodore Sedgwick, ed. (New York, 184o), 11, 86, 96;
'37 and '57, pp. 18, 23; Georgia Constitutionalist, Apr. 3, 1837; Alexander Trotter,
Observations on the Financial Position and Credit of . the States (London, 1839),
p. 43; Captain Marryat, A Diary in America (Philadelphia, 1839), p. 16; The New
Yorker, Oct. 15, 29, 1836; Mar. 4, 18, 1837; Oct. 12, 1839. For a more detailed account
of the panic of 1837, cf. W. G. Sumner, A History of Banking in the United States (Nelv
York, 1896), pp. 266, 294, 335; and particularly R. C. McGrane, The Panic of 1837
(Chicago, 1924), passim.
4 The Diary o f Philip Hone, Allan Nevins, ed. (New York, 1927), I, 294, 378, 385,
485 f. For the general collapse of values, cj. Hunt's Merchants' Magazine, I (Aug., r839),
. .
664
Samuel Rexneck
Not only individuals, but whole communities were involved in the
general collapse. There was the case of Buffalo, which Captain Marryat
found in a stagnant state, following a period of ~henomenalgowth.
Its leading promoter and benefactor, Benjamin Rathbun, was in jail,
whle all of his vast enterprises were involved in a series of fraudulent
endorsements. With the collapse of prices, the tide of bankruptcy rose,
engulfing nearly everything and everyone. "Failures, numberless and
without limit, and hardly create a sensation." In the few months of its
operation the Federal Bankruptcy Act of 1842 finally wiped out four
hundred and fifty million dollars of debts, affecting one million creditors.
Philadelphia derived amusement from a spurious message of the governor, which recommended the project of a special railway to Texas for
defaulters!
Labor, as well as property, suAered from the prolonged process of
contraction and liquidation, although it is impossible, of course, to measure comparably the degree and kind of loss which each class incurred.
Labor's loss came chiefly from want of employment and from lowered
wages, which created an immediate problem of relief, particularly in the
larger Eastern cities. Labor, however, was also subjected to other more
general stresses. Class consciousness was intensified, while current doctrines of class antagonism received a sharper definition in theory, and
even some application in practice.
The hardships of labor began to command early notice. Already in
April, 1837, a call was issued for a meeting of the unemployed in Greenwich Village in order to petition the city for work. An early estimate
reported that fifty thousand were unemployed, and two hundred thousand without adequate means of support in New York City. In August,
a New York journal carried the story that five hundred men had
applied in a single day, in answer to an advertisement for twenty spade
laborers to do country work at four dollars a month and board. While
announcing somewhat prematurely that the country was now at the
bottom of the hill, Greeley added that fully "one-fourth of all connected
with the mercantile and manufacturing interests are out of business, with
dreary prospects for the coming inter".^
185; New York Spectalor, Apr. 27, 1837; New York lournol of Contmerce, Jan. 4 , 18.40:
McCrane, pp. I 1 2 A.
"Marryat's Diary, p. 48; Niles' Register, Aug. 13, 1836; -4ug. 12, 1837; May 2, 1840;
Horace Greeley, Recollections of a Busy Life (New York, 1868), pp. 94 fi.; fortrnal of
t h e Anzerican Institfcte, IV (May, 1839), 506; lorrrnal of Cotnmerce, Jan. 11, 1 8 4 0 ;
?.rurtt.r, Obseruations, p. 43; D. Morier Evans, T h e Hzstory o f fhe Comn~ercialCrisis, 1857
(Lundon, 1859), p. 139.
6 New Era, Apr. 20, 22, 1837; Nzles' Register, June 10, Aug. 12, 1837; Feb. 15, 1840;
Social H i s t o r y of an American Depresrion
665
Similar conditions prevailed at other points in the country. A correspondent wrote that two thousand were out of work at Lynn, while
wages were reduced to half the earlier rates. In Boston as in Lowell the
mills were lifeless, many going only "in mercy to the workmen and all
were living on their savings". In the fall of 1837, nine tenths of the factories in the Eastern states were said to be closed. In New York "the
markets begin to look gaunt, and the theatres are deserted . . . Winter
and starvation are yet some months off "?
As winter approached, house renters in New York were planning
mass action against the coming quarter rent day. The landlords were
advised to wait and to take what they could get, while the unemployed
should go rent free. The Erie Railroad offered to employ three thousand
men, if the city would lend its credit for supplies. An editorial in the
New Era, under the caption of "The Poor! The Poor!", warned that
some foresight was necessary, or "a civil volcano may explode". Greeley's
comment was: " 'Hard Times!' is the the cry from Madawaska to Galena." H e advised the wealthy and the benevolent-minded to provide
work for all who wanted it. T o the workers he offered the caution to
keep their jobs if they had any. Those without work should stay away
from the cities. The South presented little hope, and "the West doubtless offers the fairest inducement to the emigrant. . . . But even Western
emigration may be overdone." New York was too crowded, and the
city factory had been overbuilt, but there was room within the pale of
civilization, and it was not necessary to go "beyond sun-down". In any
event, Greeley's advice was, "Fly, scatter through the country, go to the
Great West, anything rather than remain here. . . ." The thousands
already migrating westward might, however, have to move as far as the
Rockies in order to escape the malice of the "Van Buren party"?
As predicted, the first winter of the depression was a hard one, taxing
the resources of the larger communities in ,the organization of relief,
The problem was relatively new, and relief was largely haphazard. In
New York there was a central committee for the relief of the suffering
poor, which sponsored lectures and concerts as a means of raising money,
but it was generally complained that hordes of beggars thronged the
streets and knocked at doors. All that could be done was to see that
New Yorker, Apr. 22, May 27, 1837; Publius, Remarhs on ihe Currency of the United
States (New York, I 840), p. 47.
7Richmond Enquirer, May 19, Aug. 29, 1837; hTiles' Register, June 10, Aug. 12,
Sept. 16, 1837; New Yorker, Apr. 2 2 , June 10, 1837; McGrane, p. 131.
New ~ o r k e r ,Apr. 2 2 , June 3, July 8, r g , 22, Aug. 25, Oct. 7, 1837; New York
Spectator, Apr. I I , June 5, 1837.
666
Samuel Rezneck
none froze or starved. Once winter was over, the poor were expected
to "subsist on the milder state of the atmosphere". Greeley's sympathy
went out especially to the respectable mechanics, "whose cry was, not for
the bread and fuel of charity, but for Work! . . . Work! ..."?
Only in certain New York wards, such as the sixth and the seventh,
was the organization of relief relatively effective. Here a central executive committee regulated the solicitation of gifts, and everything was
strictly accounted for. Orders for food and fuel were drawn upon a
common store in the ward, while in the smaller districts visitors were
assigned to every block or two. But even this was not enough, and
Greeley, whose personal interest in relief was more than casually
journalistic, recommended a permanent organization of all the charitable
people in the city, as well as a union with similar associations all over the
country, "for the extinction of mendicity and suffering from want".
Primarily its purpose should be to provide work, and an intelligence
office ought to be set up for this.''
Greeley's experience with the depression left deep scars upon him and
directed his attention permanently to theories of general social reform.
H e also returned frequently to the specific problem of relief for unemployment. In this he was like a prophet crying in the wilderness. H e
pleaded for the continuance of public works, which alone kept wages
from falling lower. Even if mistakes had been made, it was necessary
to go on, especially since prices were down. A year later Greeley again
turned to his favorite theme, "to furnish honorable and suitable Employment to every waiting, wanting son and daughter of Adam within its
limits". H e advocated the creation of an "Exchange of Labor", where
purchaser and seller might meet, but it must not be allowed to depress
other labor. Greeley had arrived at the doctrine of Man's Right to
Work, and insisted that it was only the sound "principle of Mutual
Insurance". During the last four years, he added, the loss from unemployment and misdirection of labor had averaged one hundred million
dollars a year, and was, therefore, a vital question, "of more importance
than any ruling political topic . . ."?I
9 New Yorker, Jan. 20, 1 8 ~ 8 New
;
York Spectator, Jan. 4, 18, Feb. 26, 1838; New
Era, June 11, 1838; '37 and '57, p. 30; Arcturus, I (Apr., 1 8 4 1 ) ~303 ff.
l O N e w Yorker, Jan. 20, 1838; New York Spectator, Jan. 4, 1838. New York's experience at this time with the problem of relief supplied the incentive for and finally led
to the organization, in 1843, of the New York Association for Improving the Condition
of the Poor, which undertook to put philanthropy on a regular and scientific basis in
succeeding years (Twelfth Annual Report, 1855, p. 34; seventeenth Report, pp. 13 ff.).
New Yorker, Feb. 29, May 2, 1840; July 17, 2 4 , 31, 1841; Charles Sotheran,
Horace Greeley (New York, 1892), p. 48.
Social History of an American Depression
667
Philadelphia, like New York, had its problem of relief, for which it
resorted to the familiar method of the soup house. At a public meeting
in 1837, a committee reported that prices were high and suffering great.
It was recommended that the state set up public granaries and coal yards,
where the miner and farmer could be assured a fair price, and the consumer might buy "at cost". Another committee of sixty was appointed
to beg for the poor, who were "dying of want".12 In Boston the Society
for the Prevention of Pauperism became alarmed at the spread of
beggary and, in 1838, set up an office for finding work or inducing the
unemployed to leave the city. Even in 1844, when work was said to be
abundant, the Employment Society had a list of some seven hundred,
for whom it was unable to obtain work. At this early date the thought
was dawning that some permanent unemployment was perhaps unavoidable in the larger city. In 1845 the estimate was made for New York
that "there are at no time less than twenty thousand persons vainly
seeking work in this city". Three hundred thousand others lived on
approximately a dollar a week per person?3
Greeley's plea that the depression must not be allowed to injure labor
was, of course, unheeded. In the boom years preceding 1837, labor
activity had increased greatly; unions and strikes were the order of the
day. The inevitable reaction had followed, and a symptom of it was
suggested in the advertisement of a hat manufacturer who,offered his
services, with those of his workmen, "all of whom are little affected
with ... the moral gangrene of Trades' Union principles". They worked
without "the inconveniences, injustice . . . regular combinations, and
periodical strikes . . .". The depression favored the further progress of
the reaction. In 1837, a journal welcomed the offer of the trade societies
to reduce wages, but added that "the labor of voting was quite lost".
Wages would come down in any event, and it was hoped that "the
employers will to the full adopt the English policy and employ no men
who do not forever abjure the unions. . . . The rules of the unions as to
hours, pay, and everything else ought to be thoroughly broken up."
At a time when there was little work to be had, the advice seemed rather
gratuitous that "to work only ten hours in the summer and eight hours
in winter is to waste life".14
l2Niles' Register, Feb. 25, 1837; Thomas Brothers, The United States of North
America as They Are (London, 1840), p. 66; J. S. Buckingham, America (New York,
1 8 4 1 ) ~I, 113.
I3 North American Review, LXI (July, 1 8 4 5 ) ~1 3 A,; R. C. Waterston, An Address on
Pauperism (Boston, 1 8 4 4 ) , pp. 10 ff.; The Harbinger, Aug. 2 , 1845,
14 New Yorker, July 24, 1 8 4 1 ; '37 and '57, p. 9 ; John R. Commons, i'iistory of Laborrt
in he United States (New York, I ~ Z I )I, 456;' McGrane, p. 134,
Satnuel Rezneck
668
The ills of depression were obviously many, and they called for
prompt diagnosis and some cure. Here, however, a familiar dilemma
presented itself, such as has, in fact, appeared in every American depression. The doctor was also the patient, and neither the diagnosis nor the
proposed remedy could, therefore, have the necessary degree of dispassionate and clearheaded deliberation. T h e ailments, moreover, were
at a crisis and could scarcely wait; yet there were many clashing interests. Already in 1840, it was aptly remarked, in reference to the current controversy over banking, that the question had "very little attraction
for the generality of men, except at moments of difficulty and distress,
moments when they are least of all qualified to form a sound and discriminating judgment . .".
.
[Now, however, like drowning men, they catch at any straw, and]
readily adopt any theory which tends to relieve them from all responsibility
for the misfortunes which they suffer, and which holds out . . . the splendid
vision of a sudden restoration of that prosperity and wealth which they feel
to be slipping from their gasp.15
Many were the straws thus grasped at in these years; and, if their
ability to support and to supply cause or cure was small, they are at least
useful in pointing the direction of the wind. It matters little now
whether the diagnoses offered were good or true; the important thing is
that they represent contemporary judgment. Taken together they constitute a complex pattern of speculation and controversy reflecting the
manifold social interests involved.
Of causes to account for the depression there was a prolific abundance,
ranging from the trivial and purely incidental to the most impressively
profound. What was often only a mere circumstance in the general
situation was magnified into a central and vital cause, In this almost
mythical age of rugged individualism, the sins of government were too
often regarded as an adequate explanation of all social ills. Many of
the alleged causes served merely as weapons in the fierce battle of incrimination and recrimination. On the one side, it was charged that the
failure to recharter the Bank, the distribution of the Surplus, and particularly the Specie Circular had brought on the catastrophe.16 As
against that, the panic of 1837 was laid to a deliberate conspiracy of the
(Mar., I 84 I ) , 245.
New Yorker, May 6, 1837, for a long list of 21 causes, covering nearly everything.
New York Spectator, Apr. 4, 1837; Trotter, Observations, p. 35; '37 and '57. pp. 5 ff.;
Edward G. Bourne, T h e History o f the Surplus Revenue of 1837 (New York, 1885),
15 Merchanfs' Magazine, IV
P. 13.
Social H i s t o r y of an American Depression
669
opposition. Already in the fall of 1836, the Whigs were accused of
calling on the merchants to close their stores and ofices and to go into
the streets as missionaries. Webster's appearance in New York at a
critical moment, early in 1837, was "the first formal public step which
was to inaugurate the new distress, and organize the proceedings for
shutting up the banks . . .". Its ulterior purpose was to coerce the government into submission to the Bank "and its confederate politicians".17
The prevailing distress obviously called for a scapegoat upon which
public passion might vent itself, and the Democratic administration was
not the only victim available for sacrifice. England, in one way or another, was joined with it. Here also what was merely a circumstance
was magnified into a major cause and became a theme for angry recrimination. It was held that England was greatly to blame for America's
indebtedness, and the obligation, therefore, rested upon her to wait, or
worse might follow: "Sustain what you have built." As conservative a
man as Philip Hone complained that, in spite of our independence, we
were plunged into a new thraldom: "All we undertake to do is predicated on the chance of borrowing money from John Bull . . . and the
Bank of England becomes the arbiter of the fate of the American merchant". The more radical view is, therefore, understandable; the issues
at stake were patriotism and independence. "General Jackson . . . was
fighting in the same cause in which he fought at New Orleans, and
against the same enemy." Is
A shrewd insight into the world's financial interrelations, sensitive
to the faintest note of disturbance even in remote China, offered a truer,
because less bitter, basis for diagnosis. But this idea also lent itself to
the purposes of the partisan and the agitator. The moralist inveighed
against the wasteful extravagance and the love of tawdry display which
swelled American imports and thus exposed us to the mercies of the
international balance of trade. In a more practical way, the protectionist
rose to his opportunity in casting the responsibility for the prevailing
distress upon the policy of the Compromise Tariff. The American Institute of New York was prepared to lead the country back to prosperity
by a return to protection. It promptly issued a call for a Business Men's
Convention which met at Philadelphia during the summer of 1837. A
four-day meeting of delegates, said to represent all parties and half the
1 7 Legyett's Writings, 11, 97; Thomas H. Benton, T h i c y Years' V i t w (New York,
1854), 11, 1 2 ff.; New York Spectator, June 8, 1837.
18 Georgia Constitutionalist, Apr. 12. 1837; Hone's Diary, I, 408; Boston Qzrarterly
Reoiew, I1 (Oct.. 1839), 493. For a more just statement of England's responsibility, cf.
J. W. Gilbart, A Hi.ctory o f Ranking in America (London, 18j7), pp. 141 ff., 187.
670
Samuel Rezneck
country's business, adopted resolutions deploring the recent haste "to be
rich" and the excess of imports and foreign debt. It recommended a
return to industry and economy and the payment of duties in cash?'
The agitation for the revival of protection mounted and culminated,
in 1841, in the formation of a Home League Association, which addressed
an appeal to the people to consider "the difficultiesprevailing among the
~roductiveclasses . . . since 1836, and the still greater difficulties apprehended after the final reductions of duties, in 1842 .. .". The American
worker must not be reduced to the European level, "underfed and overworked". Local home leagues sprang up in many places, and conventions were held, which issued fresh appeals. The crisis was affecting
thousands of people, who were now idle "because no man has hired
them". Clay's great authority supported the theory that free trade was
always linked with depression, while protection brought prosperity. The
agitation promised to bear fruit as the issue was carried into Congress.
In 1842 Hone welcomed the tariff bill then pending as the "last hope
of our suffering people", but was afraid it would be vetoed. After months
of manipulation, however, it passed, and its reviving effects on business
were soon widely proclaimed. American labor, in particular, had been
rescued from "sinking rapidly into the gripping fist of European
despotism, by the approximation of its prices to the European standard . . .". The tariff of 1842 was now to put it "on the true American
basis, with the prospect of a fair reward".''
Every specific explanation of the depression thus tended to develop
into a case of special pleading. On one diagnosis, however, there was
nearly general agreement among doctors and patients. It had a moral
aspect which offered ample opportunity for indignation and severe
castigation. From the President down, it was admitted there had been
an "overaction in all departments of business.. . the rapid growth among
a11 classes . .. of luxurious habits . . . detrimental alike to the industry,
the resources, and the morals of our people". The government could do
something; but, in the main, nature must take its course, and it was not
19Niles' Register, Oct. 12, 26, Nov. 9, 1839; Richmond Enquirer, Map 26, 1837;
Iournal of the American Institute, I1 (Apr., 1837)~338, 396, 438, 492, 609 ff.; New
Youker, June 10, Aug. 5, Nov. 25, 1837.
20NiIes' Register, Nov. 9, 1839; Proceedings o f the National Convention for the
P~ntection of American Interests (New York, 1842), pp. 7 A,; Address of the Home
League (New York, 1841), p p 1 ff.; William H.Handey, Political Eqrrilibriztm (Hagerstown, 1842), pp. 92, 142; Hone's Diary, 11, 615; Colton, /rrt2irrs T~,acts,no. 111, p. 13;
John Bach McMaster, A History of the People of the United States (New York, 1918),
\'I, 65; Victor S. Clark. History of Alanrrfactt~res (New York, 1929), I, 285; F. U'.
Taussig, The Tm'fl History o f the United States (7th ed., New York, igz3), p. 113.
Social History of an American Depression
671
the business of government to offer relief. T h e governor of Pennsylvania
condemned even more strongly "that desire which is now so ravenous
of acquiring wealth without labour". T h e 'Igambling spirit" was responsible for most of the frauds which are being discovered. These have
not even startled the public.
They heard the stories with the most stoical indifference; and if any
exclamations were uttered, they conveyed rather a sentiment of commiseration for the criminals, than one of detestation for their stupendous crimes.21
To the clergy also the depression offered the opportunity for moralizing upon the evils of speculation. It was God's punishment for our greed
and recklessness. Even ministers and religious institutions had embarked
upon wild speculations, justifying them as a "means to great usefulness".
Now, as a result, false social principles were abroad, and there was a
lack of respect for property. T h e judgments of the courts were disregarded; incendiarism and lawlessness were widespread. T h e remedy
must, of course, come from a spiritual reform. There must be patience
in suffering without resort to violence, for there are more important
things than wealth: "Lay u p treasure in Heaven. All this may be done
on a small income . . . Godliness with contentment is a great gain."
T h e depression might even bear good fruit. T o be sure, there has been
some depreciation, but
.
The world stands the same. . . We are much richer in experience, much
more humble, much more frugal, and much more prudent already; and, if
the reformation proves permanent, then will even the pressure have proved
a good speculation.
Only Brownson, preaching on the text "Babylon is Falling", announced
the start of a revolution. T w o armies, arrayed under different banners,
were "waiting but the signal to rush to the terrible encounter, if indeed
the battle have not already begun".22
Speculation, however, had its rare apologists, in the very midst of the
havoc which was laid at its door. A philosophically minded foreign
observer traced its roots to the American character. Less apt than the
European for penny trade, the American launches upon daring enter21 United States Magazine and Democratic Review, IV (Jan., 1838), 3 ff.; Brothers,
T h e United States, p. 85; Leggett, 11, 87. C f . also one of the earliest satires on Wall Street
in A Week in Wall Street, by One Who Knows [Frederick Jackson] (New York, 1841).
22Leonard Bacon, The Duties Connected with the Present Distress (New Haven,
1837), pp. 4 ff.; B. P. Aydelott, Our Country's Evils und Their Remedy (Cincinnati, 1843),
pp. g ff.; lotrrnal o f Commerce, Mar. 17, 1840; Buckingham, I, 122; 0. A. Brownson,
Babylon is Falling (Boston, 1837), p. 6.
672
S a m t r ~ lR c z n e r k
prisc. T h e American credit system was personal and more democratic,
hence more speculative. Another traveler believed that a frequent
periodic "blow-up" was unavoidable in America; it occurred here once
in about every seven to ten years, as against one in every twenty years
in I-ngland. But even the crash had its utility; it served as a warning,
slowing up expansion; and, after subtracting losses, the net gain was
still considerable. Greeley likewise argued there was n o reason "to be
tloleful about the matter". Speculation was a phase of the natural
growth of the country; it did not produce the scarcity of money. O n
the contrary, the scarcity checked speculation and further growth. Even
its "miscalculation is on the right side". T h e shrewdest, if not the most
elcquent, defense d speculation came from Richard Hildreth, who remarked sensibly that when it succeeds, we call it enterprise. Only when
it fails, does opinion stamp it as a bubble. Thus d o fashions change;
the real difficulty lies in human nature, which always dodges responsibility for its mistakes. "Public opinion rushes from one extreme of
blunder to another. It seldom stops half way". Government cannot
reg~llateopinion; it must be the other way around. T h e best safety valve
~vouldbe greater freedom from such things as the usury laws 2nd fronl
politics itself.'"
With the search for the true causes of depression went, of course, the
desire to find and apply the right remedy. This released a vast amount
of both deliberation and agitation. Much of it was a kind of aimless
milling, expressing at most the vague discomfort which derived from
real distress. Some of it broadened into the general stream of class
disaffection and class conflict, while a large part of it flowed into the
channels of concrete program and specific relief. Of these the most important was the chronic issue of banking and currency, but there were
also the lesser ones, including the usury laws, imprisonment for debt,
stay and exemption laws. For several years both state and nation,,l
politics were centered upon the problem of relief in its many, often trivial
forms. T h e evils of a preceding boom and inflation had their countcrpart in the evils of the depression, in which old animosities Iverc
sharpened and new ones created. T h e underlying riddle, which puzzled
everyone, was aptly framed by the author of a pamphlet, under the
title of Common Sense, and "Especially Addressed to the Most Suffering
Portion of our Fellow Citizens . . . the Mechanics". H o w is it, asked
2".
J. Grund. The American.r (London, 1837), 11, 1 x 1 fi.; Marryat's Diary, p. 18;
New Yorker, Apr. I , 1837; Oct. 12, 1831). R. Hildreth, Bants, Ranking, and Paprr
Cttrurncirs (Boston, 184o), pp. 160 ff.; also L,etter . . . on Banking and !he Currency
(Roston, 1840), p: 9.
Social H i s t o r y of an American Depression
673
this self-styled Mechanic, that a country as rich as ours is "yet pinched
for the common necessaries of life? A vigorous, healthy, and intellectual
population, yet bowed down with gloom and despair . . . with ruin and
starvation before their eyes ?" 2 4
The cloven hoof of the partisan, however, soon appeared in its propssl
that only a restored Bank of the United States "can relieve us". Only the
Bank made all men equal, saving them from shavers and brokers. The
controversy over banks and currency embraced, as was clearly understood at the time, the general question of price inflation or deflation.
Curiously enough, the relation of the creditor and debtor classes to this
issue was not the conventional one, nor was their attitude wholly consistent. The radicals, ~ r e s u m a b l r~eflecting the debtors' position,
clamored for hard money and were against banks and credit, at least in
their present familiar form. In vain did the other side, favoring the credit
system and its extension, point out that more, and not less money, was
needed to save the debtors from disaster. They protested that "the cures
of the ignorant are themselves diseases". Hard money and the treasury
system would depreciate labor and property by at least two thirds. "All
the gain would be to the rich, and all the loss to the poor." Debtors would
be forced to pay three times as much, and this country would cease to be
the haven of the poor man. Greeley added his dread warning that to
destroy the credit system was to throw a million men out of work,
enabling "grasping wealth to secure [labor] for a bare trifle . .". He
urged "all sober and reasonable men" to unite "against the quack notions
of the day". Protect and extend the credit system, and high prices will
bring high wages. A year later Greeley argued that a metallic money
"may be made a far more perfect instrument of monopoly and oppression". H e was prolific in recommendation and suggestion. The national
government might issue and distribute one hundred million dollars in
Treasury notes bearing one per cent and receivable for all public dues.
New York State should incorporate a gigantic loan and trust company,
and thus add fifty million dollars to the circulation, on the security of
real-estate mortgages.25
None of these arguments and pleas seemed to weigh against the wide
distrust of banks and their irredeemable paper money. Even the Hamiltonian advocate of a new national bank admitted that the ba~lksnus st
not be allowed in the future "to grind the very substa~lcefrom the ill-
.
C o n ~ m o nSense (Philadelphia, 1837), pp. I ff.
Georgia Constitutionalist, Apr. 1 2 , 1837; N e w Yorker., Mar. 4 , I I , May 6, July 22,
183j ; Feb. 2 4 , hfdr. I U , 2 4 , 1838; ,llerrhun~s'.blngatinr, I (Dec., 1835), 505 ff .: /oz<rnal
o f Cummewe, Jan. 2 2 , 1840.
24
674
Samuel Rezneck
debted". A more radical critic warned the workers not to be "deceived
about banks and the credit system. Banks to help farmers appear to me
something like feudal lords to defend the people." They have only
"enabled speculators . . . to seize upon all the great branches of national
industry . . . wrest them from the hands of the real manufacturer and
put them into the hands of corporations . . .". One of these victims of
the engrossing process in industry, Thomas Brothers, was bitter against
the new "go-ahead men", but added that even they "are no other than
mere slave-drivers to the bankers . . .".%
The case against banks and paper currency rested on both moral and
practical grounds. T o Ingersoll, who prepared a minority report against
banks for the constitutional convention in Pennsylvania, which refused
it publication, "the paper money mongers are at once suicides and
fratricides. They destroy money, morals, law, order, industry, liberty,
equality and property." The ancient prejudice of country against city
was invoked.
The countryman, with his dirty acres, is richer than the tradesman on paper
pinions . . . . and if country people could but unite against the disorganizers,
as they greatly outnumber them, they could put them down with ease at once.
A mass meeting in New York condemned the paper system as neither
honest nor C h r i ~ t i a n . ~ ~
The credit system did not even supply a steady and reliable medium,
as was its boast. On the contrary, its practical effect was "mischievous
and ruinous to the permanent prosperity of the country.. .". It kept "the
whole country in a complete state of uncertainty and derangement".
Actually it was an "anti-credit system", which is generous with loans
when money is at three per cent a year, but "demands them back with
more than Shylock sternness, when it is at three per cent a month . . .".
Elsewhere Brownson urged that credit should not be allowed to extend
beyond the rock bottom of actual resources. H e admitted that such a
policy would bear hard on debtors, but they could have justice done
them. H e proposed calculating the percentage of currency appreciation
due to the deflation, which could then be subtracted from the'debts. The
creditor would have exactly what he lent, but no more. Brownson argued
that such deflation, while bold, was yet sound. "It is better to take a
2 e ~ e r c h a n t r " ~ a g a z i n eI , (Sept., 1839), 220; The N e w Era, Mar. 10, 1837; Georgia
Constitutionalist, Mar. 4 , 1837; Brothers, pp. 70 ff.
2 7 N e w Yorker, Mar. 25, June 10, 19, 1837; Richmond Enquirer, June 6 , 1837;
Niles' Register, Aug. I 7, I 839.
Social History of an American Depression
675
medicine, which will expel a lingering disease and restore us to healtl-r. . . .
It is better to feel the full shock of the evil at once ..
This factor of fluctuating uncertainty in the credit system also troubled
as conservative an economist as H. C. Carey, who examined it in a series
of articles during 1840. H e concluded that "restriction cannot give steadiness", but was, in fact, responsible for increased unsteadiness. The
remedy lay in complete freedom of association, subject only to a requirement of "perfect publicity . . . of all associations claiming to limit their
liability . . .". This solution of full freedom of association, with its
implication of more rather than fewer banks, also appealed to the radical
anti-monopolist, who insisted on adding, however, a further requirement of unlimited liability. Such inconsistency of attitude was the symptom of a mental confusion, which earned the pointed censure of a contemporary critic.
[In spite of our bitter experience with a banking system which many
condemn as] the very worst of all possible banking systems . . . yet how
fondly do we see the minds of a large portion of the people clinging to it as
the ark of our salvation. . . . Banks, more banks,-is the constant clamor at
every session of every legi~lature.~~
The movement for free banking developed in New York, and led to
the enactment of a law for that purpose in 1838. Its opponents complained that the existing banks were adequate for all needs, and that the
new ones were merely an incentive to fresh speculation. It was reported
that Wall Street was much excited over the measure, and that one third
of New York's real estate was free to be turned into new bank capital.
Within two years it will "produce expansion, speculations, fortunes, and
efforts, such as few at this day can realize". This dire prediction did
not come true in New York, but in Michigan a similar free banking law
produced disastrous results after 1837. In the next two years it seemed
as if "every village plot with a house .. . if it had a hollow stump as a
vault, was the site of a bank". By 1839 forty-two of these new banks had
passed into insolvency, and a million dollars in worthless notes had
entered into circ~lation?~In the face of the strong sentiment for free
banking the demand for a new national bank had too clear an implica2 8 Boston Quarterly, I11 (Jan., 1840), 85; Brownson, Our Future Policy (Boston,
1841), p. 44; Theophilus F ~ s k The
,
Bank Bubble Burst (Charleston, 1837), p. 28.
29 U.S.Demorratic Review, I1 (Apr., 1838), 7; Merchants' Magazine, I11 (Dec., 18qo),
482 ff.; Leggett's Writings, I, 104;11, 314.
30 New York Spectator, Apr. 7, I 837; Georgia Constittrtionalist, Apr. 28, 1838; D. D.
Barnard, Speeches in the Assembly of New York (Albany, 1838), pp. 143, 178; McMaster,
VI, 405; Sumner, pp. 312, 403.
676
Samuel Rexneck
tion.of monopoly to make any headway. Although a writer, signing
himself Aladdin, claimed for Boston a prior right to such a bank as late
as 1841, there was no longer any magic in the idea; it had become purely
academic.31
Under the pressure of general distress alarming symptoms of mass
disaffection appeared, and the threat of social disorder loomed large at
the moment. There never was a time like this, wrote an observer in
1837. From everywhere "comes rumor after rumor of riot, insurrection,
and tumult". The public is ready to explode, "and it matters not what
is applied to the train-abolition, Grahamism, high prices of food, bank
frauds, or gambling. . . ". H e trembled for the security of the country,
should its chief props, respect for the law, the belief in God, and the like,
be removed. The plan of action proposed was to fight the infidels and the
agitators, among other ways, by means of a "Cheap Repository" of tracts,
on the model of Hannah More's, for enlightening the people.32
In 1841, another writer called "Ours . . . the age of suicide and
mysterious disappearance". The restless spirit of the time gathered men
into "noisy and tumultuous masses-shouting for change, reform, and
progress. The world lives abroad. . . . The domestic feeling-households-are in a measure abrogated . . . ". As for the remedy, there was a
great need for "apostles of peace and tranquility". There were too many
"alarmists and preachers of agitation. . . . It is necessary that the heart of
the age should be soothed and calmed . . . ".33
The prevailing "hostility to indebtedness" was a source of apprehension to many, and it was especially deplored that even in respectable
quarters there was "an amiable sympathy with what is called 'the
masses' ". Already the tangible consequences have been such things as
the repudiation of state debts, rebellion in Rhode Island, and a repudiation of debts and rents in New York State. The cry of feudalism was
spreading to the western territories, where land offices have been in
danger of attack. The anti-rent disputes, troubling upper New York
State after 1839, shocked Philip Hone, who described them as "of a piece
with the vile disorganizing spirit which overspreads the land like a
cloud and daily increases in darkness".34
31 Proceedings
o f the Frierrds o f a Nutior:al Bunk (Boston, 1841), pp. 6 A,; S u n ~ n e r ,
P. 3 55. 52 T h e Knickerbocker, IX (May, I 8 j 7 ) , 488, q93. "Arcturus, I (Feb., 1841), 133 ff. 34 D. L). Barnard, T h e Ar~tz-RentMouen~entin New York (Albany, 1846), pp. I ff.;
Hone'> Diary, I, 435 f.; McMastrr, VI, 5 2 1 ; VII, 186; Edward P C h e ~ n e The
~ . Anti-Rent
2.fyrtatron (Philadrlph~a,I 887), pp. 2 j ff.
Social H i s t o r y of an American Depression
677
There was an alarming tendency toward urban disorder as well, for
even Hone noted the near-famine prices in the New York food markets
early in 1837 and wondered, "What is to become of the laboring classes?"
A series of meetings held in New York during 1837 under Loco-foco
auspices revealed the scope and direction of current mass discontent.
The very first of these meetings culminated in an attack on several flour
stores and created particular alarm. The others were limited to the usual
resolutions and addresses but inspired fear in those more timid.
[In language reminiscent of Carlyle, one of these gatherings was described
as] standing in ominous darkness, save for the lurid light shed upon their
cadaverous-looking faces from twenty or thirty flambeaux. . . . Over their
heads, floating in the dark and poisoned breeze, were a variety of banners. . .
underneath these stood the managers and orators, who were straining their
lungs to swell the sounds of their cracked voices. . . . We might and should
probably have laughed, but for the recdlection of the lamp-posts, the . .
Jacobins, and the G ~ i l l o t i n e . ~ ~
.
Actually the resolutions adopted at these meetings were tame enough.
They demanded salary reductions in the city government and economy
generally; they asked for employment on public works, and they recommended that the destitute immigrants and others be removed to the
country. Their strongest resentment was voiced against the "legalized
robberies" of the credit system; at the fifth in the series of meetings, it
was proposed "to let credit alone", neither to enforce nor to annul debts
by law, but to let them rest on honor only. Such a free system of credit
would be "simple, efficient, and just". Finally, a call was issued, amid
great cheers, for a "New Constitution, based . . upon the broad and
eternal basis of Right". In September, 1837, a Loco-foco convention at
Utica adopted a program of constitutional revision, in which the principal issues were embodied. There should be no forcible collection of
debts, nor was the state itself to incur a new debt without the people's
sanction. These, with other recommendations covering the incorporation of banks and the principle of unlimited liability, became the main
features of the movement for constitutional revision which spread into
a number of states in succeeding years.3'
Loco-focoism thus reached its climax in New York in a year of
.
35Hone.s Diary, I, 243; New Yorker, Feb. 18, Mar. 18, 1837; Niles' Register, July
I , 1837; New York Spectator, Nov. 9, 1837; F. Byrdsall, T h e History of the Loco-Fore
or Equal Rights Party (New York, 1842), pp. 99 ff.
3eRichmond Enquirer, May 16, 1837; Byrdsall, pp. 109, 141 A., 162, 174, 188; Conrtitutional Reform, Thomas P. Kettell, ed. (New York, 1846), passim.; Dixon Ryan Fox,
T h e Decline of Aristocracy in the Politics o f New Yo>./( (New York, 1919), pp. 397 ff.:
McGrane, p. 153.
678
Samuel Rezneck
severe depression; its final triumph perhaps was to see the name extended and applied thereafter to the whole Democratic party, although
its die-hard leaders protested that it should continue an independent
existence as the ideal of Christian democracy. The alarming spread of
what was loosely labelled Loco-focoism was, however, reported from
other sections of the country. In Cincinnati it was some "English natives,
mustard dealers, Penny petticoat lecturers, of questionable sex, and a few
American natives", who organized a celebration of Tom Paine's anniversary. The Charleston Courier rejoiced that an incendiary call for a
mass meeting against the banks had failed. The respectable and the
orderly had taken possession of the
Elsewhere, however,
in Virginia, at Philadelphia and at Baltimore, such meetings had been
more successful, and the "Panacea Loc~fociensis"had been approved.
From the Southwest came reports of more serious disorder. In Mississippi sheriffs had been removed by force, and a courthouse had been
attacked. The Scioto Gazette rebuked all those who were engaged
in the diabolical work of arraying one portion of the community against
another, the poor against the rich, the laborer with the hands, against the
laborer with the head . . . as though the farmer of this year may not be a
lawyer next, or the mechanic may not also be a banker.37
In the reaction which followed, nativism, a persistent factor in American
social and political life, gathered fresh strength and entered upon a
period of new growth. A nativist association at Germantown, in 1837,
protested that the paupers and malcontents of Europe were spreading
radicalism. During the next few years, petitions to Congress, from
many quarters, expressed a fear for the safety of republican institutions
and complained that a foreign party was being formed. It was charged
that the election of 1844 had been decided by an appeal to Europe against
Ameri~a.~'
Such broad social grievances requiring large general remedies could
not, of course, provide adequately for the particular stresses and strains
which had developed. Here more specific measures of relief were
needed, and many were adopted in proportion as group pressures began
to make themselves felt. A close-knit group like the New York mer37 Cincinnati Daily Gazette, May 5 , 1838; Scioto Gazette, Sept. 20, 1838; Richmond
Enqrrirer, May 26, June 6, 30, July 18, 1837; New Yorker, March 25, 1837; McMaster,
VI, 398.
38 McMaster, VI, 367; VII, 369 ff., 385 ff.; also by the same author, T h e Acquisition
of Political, Social, and Indrrstrial Rights of Man in America (Cleveland, 1go3), p. 104;
J. Thornas Scharf and Thompson Wrstcott, History of Philadelphia (Philadelphia, 1884).
I, 663 ff.
Social H i s t o r y of an American Depression
679
chants was quick to formulate its demands in concrete form. Already in
May, 1837, they asked the state to lend its credit to distressed merchants
up to six million dollars for a period of ten years. A committee was also
dispatched to Washington to demand a special session of Congress, the
revocation of the Specie Circular, and the suspension of suits against
defaulters on customs bonds. When Congress met in special session in
September, it granted relief to merchants, among other provisions, by
extending their customs bonds until 1 8 ~ In
~ the
. ~meantime,
~
on all
sides "Relief was the cry-regulation of the currency-a National Bank!"
Party conflicts were waged keenly with weapons forged in the existing
state of depression. It was the misfortune of the Van Buren administration that its career began just before the panic broke. Thereafter it
labored under a great handicap; "the single cry of the opposition is
'turn out the rogues' ",which in the end succeeded. T o their own needs
and to those of others the legislatures of states and nation addressed
themselves, pouring forth a mass of relief legislation, which defies complete enumeration or even classifi~ation.~~
The immediate danger of financial stringency in the Federal government was averted by an issue of ten million dollars in one-year Treasury
notes, while the distribution of the fourth installment of the now theoretical surplus was postponed, never to be made. The issue of the Independent Treasury was brought to the front, and remained crucial for
several years. Federal finances generally entered upon a period of growing deficiency as revenues fell from a peak of forty-eight millions in 1836
to fifteen millions in 1838 and an estimated twenty-three millions in 1839.
In four years the Van Buren administration was charged with an accumulated deficit of fifty millions, and the Secretary of the Treasury
made the desperate, if rather academic, suggestion that the states return
a part of the surplus on deposit with them. An apologist for the government shrewdly observed that retrenchment had not failed for want of
an earnest desire to "reduce expenses, and thus gain the credit with the
people of loving economy". But "expenditures do go on, and will go on
increasing", and the beginning of a new national debt was unavoidable>'
39 New Yorker, Apr. 29, 1837; Georgia Cor~stittitionulist,Apr. 22, 1837; McMaster,
VI, 395; U . S. Demonutic Revietu, IV (Jan., 1838), 17.
40Scioto Gazette, Apr. 19, 1838; Junius, T h e Crisis (New York, 184o), p. 14; U . S.
Democratic Review, IV (Jan., 1838), I ff.; V, 350; Niles' Register, May 20, 1837.
4 1 U. S. Detnocratic Review, IV, 49; leffersonian [Albany], Sept. 8, 29, 1838; New
Yorker, Dec. 28, I 839; Feb. 22, I 810; Kendull's Expositor, Oct. 21, I 841 ; Niles' Register,
Feb. 9, 1839; Merchants' Magazine, I (Sept., Dec., 1839), 271, 498; Colton, T h e Iunirrs
Tracts, no. I , p. 10; Memoirs of Iohn Quincy Adams, Charles Francis Adalns, ed. (Philadelphia, 1876), IX, 376; Bourne, p. 41; McGrane, p. 209.
680
Samuel Rezneck
Under a new administration, in 1841, a special session of Congress
authorized a loan of twelve million dollars, and five millions more in
1842. Special duties were added to provide more revenue. A critic
appraised the policy of "Whig Retrenchment and Reform" as meaning
more taxes, more expenditures, a new debt, and continuing deficits. A
more friendly writer, however, reviewed the solid achievements of what
he described as the diligent and disciplined body of honest men comprising the Twenty-seventh Congress (1841-181~), which had really tried
to restore prosperity by enacting a record number of bills in three sessions
of unprecedented length. In all there were 514 laws, including a new
tariff and a Federal bankruptcy act.4'
Like the Federal government, few states escaped without a deficit in
their ordinary budgets. Pennsylvania had a shortage of one million dollars in 1839, and resorted to rather questionable methods in raising a loan
to cover arrears. New York, with better credit, was able to borrow three
millions in 1841. Massachusetts pledged itself to meet future expenses by
means of "taxation and retrenchment". Maryland adopted new taxes in
1841; Kentucky, Indiana, and Illinois increased their land taxes by as
much as fifty per cent.43 Many of the states were further embarrassed
by the heavy burden of their debts, which in 1840 amounted to nearly
two hundred million dollars. More than half of it was held abroad, and
the suspension of specie in 1837 presented the immediate question of how
current interest was to be paid. Pennsylvania and Maryland at first
demurred but eventually fell into line and agreed to pay in specie or its
equivalent, by adding the prevailing premium?"
Especially serious, however, was the fact that after a time some of the
states could not meet the interest requirements at all; between 1841 and
1842 eight states went into default, and two or three even repudiated part
of their debts. For several years default and repudiation supplied the
occasion for international recrimination and embittered public opinion
on both sides. As early as 1840 the Senate lectured the states on their
extravagance and rejected the proposal to transfer the state debts to the
Federal government. Various schemes of this kind received currency,
h'ew Yorkev, Mar. 27, 1841; Colton, pp. 12 ff.; Kendall's Expositor, July 14, Aug.
21, NOV. 18, 1841; McMaster, VII, 57, 65.
4 3 Albert Gallatin, Suggestions on the Banks and Currency o f the Ser,eval United State3
(New York, 1841), pp. 48 ff.; KendaN's Expositor, hlar. 1 7 , May 5, 1841; T h e American
Almanac (Boston, 1842), pp. 100 ff.
American Aln~anacfor 1842, p. 97; Trotter, pp. 105, 350; R. C. McGrane, "Some
Aspecrs of A~mericanState Debts in the Forties", A m . Hist. Rev., XXXVIII (July, 1933),
b73; Wlll~arnA. Scott, T h e Repz~diarion o f State Debts (New York, 1893), p. 277.
'2
4, Oct. 6,
"
Social H i s t o r y of an American Depression
681
however, but were met with the objection, among others, that only the
Rothschilds and the Barings would really be relieved by them. As late
as 1843 the movement for Federal assumption of state debts was again
stopped in the Senate.45
In the meantime, however, even Federal credit suffered abroad. In
1842, the Treasury was unable to negotiate a loan in Europe, and the
agent reported that the bankers did not now dare to offer American
bonds to their clients. Partly it was because the bankers hoped to force
the government into assuming the state debts, but also "partly, perhaps,
from real doubts of the solidity of our institutions, and, partly, probably,
with a view to make us all feel discredit . . sensibly". In vain did one
writer protest that such discredit was not deserved. The Federal government had virtually no debt; two thirds of the states were paying theirs,
but Europe persisted in misunderstanding us, even in such a matter as
the recent failure of the Bank of the United States. Europe now believed
it was a national establishment, only because they "wish it to be believed so . . . ".%
With its roots back in 1837, a broad movement for the revision of
state co~~stitutions.
was traced by a contemporary chronicler to "one
single cause-the improvidence of the Legislature in contracting debts
on hehalf of the State". In New York, although far from being the
worst offender, the spirit of reform grew "after the State had been
threatened with bankruptcy". Other forces contributed to it, of course,
and by 1847 states as far apart as New York and Louisiana, Iowa and
New Jersey, Texas and Missouri had framed new constitutions. It was
predicted that before long this cycle of constitutional revision woultl
have reached one third of the states. With many variations in detail, the
new constitutions agreed particularly in curbing the economic powers
of the legislature. In general, it might not lend its credit to or acquire
stock in any private enterprise, nor could the legislature incur a new debt
beyond a certain amount, often set as low as fifty thousand dollars, without the people's sanction and without ample provision for its repayment.
In addition, stringent rules were imposed upon the legislature in the
incorporation of 'banks and other enterprises. Where not forbidden
entirely, banks were to bear full, unlimited liabili~y;in New York, how-
.
45 North American Review, LVIII (Jan., 1844), 122; Iotirnal o f Comnterce, Feb. 13,
1840; Kendall's Expositor, Mar. 30, 1841;A m . Hist. Rev., XXXVIII, 680 ff.; Scott, pp.
2.8, 2 4 8 ; McMaster, VI, 352 ff.; VII, 43; Leland Hamilton Jenks, T h e Migration o f
Rritrsh C a p ~ t n l(New York, 1927), pp. roo ff.
4 6 Thomas G . Car?, Letter to a Lady in France (Boston, 1844)~
pp. l o ff.; Scott, p. 258;
bydncy S r n ~ t h .Letters on Anierican Debts (New York, 1844), passim.
682
Samuel Rezneck
ever, only double liability. New York also abolished all feudal tenures.
The most advanced of these new constitutions, in Louisiana, received
the tribute that "up to this day, it is doubtless the wisest political Constitution in force over any nation or people in the
The private citizen, as well as the state, needed protection against
past abuse and present hardship. If the banks were permitted to suspend
specie payments, some form of stay for the ordinary debtor would be
only a just equivalent. Besides authorizing a five million dollar loan for
the benefit of debtors, Alabama provided for the deferred repayment of
bank debts. Illinois had a similar stay law, while Virginia required the
creditor to accept current bank notes, or wait. In a number of states the
collection of debts was linked up with the principle of appraisal. In
Ohio, Indiana, Michigan, Mississippi, and Illinois property could not
be sold at a forced sale, unless it brought a minimum price, usually two
thirds of the appraised value. When the Supreme Court declared the
Illinois appraisal law unconstitutional, in 1843, a local meeting recommended that the verdict should be resisted?' The debtor's right to the
exemption of a portion of his property from a forced sale was also reinforced and extended in many states. Under a law of 1842, New York
allowed the householder and mechanic to retain furniture and tools
worth one hundred and fifty dollars. Michigan protected the lumberman's oxen, the farmer's implements, and the housewife's furniture
against seizure for debt. Mississippi exempted as much as one hundred
and sixty acres, together with the necessary livestock and provision^.^'
Imprisonment for debt was a grievance of long standing, but the
movement for its abolition received a fresh impetus after 1837. Between
1837 and 1842, Ohio, Vermont, Indiana, New Hampshire, Louisiana,
Connecticut, and Mississippi left fraud as the only legal ground for
imprisoning the debtor. An act of 1840 placed the non-resident debtor
on the same basis as the resident of New York in respect to imprisonment. In 1839 Congress instructed the Federal courts to conform to the
law of the state in which suit was made as regards the imprisonment
of debtors. There was even a proposal that a constitutional amendment
47 Constittltional Reform, pa~sim;Arthur May Mowry, T h e Dorr War (Providence,
I ~ O I )pp.
, 335, 375; McMaster, VII, 182 ff.
48 William M. Gouge, An Enquiry into . . . the Fiscal Concerns of the United States
(Philadelphia, 1837), p. 40; New Yorter, May 20, 1837; Richmond Enquirer, July 4, 7,
11, Aug. 4, 1837; Feb. 6, 1838; Cincinnati Daily Gazette, Apr. 14, 1838; McMaster, VI,
624 ff.; VII, 44 ff.
49 McMaster, VII, 47.
Social H i s t o r y of an American Depression
683
take the remnant of that barbarous power away from the states altogether.'' As in 1819, during an earlier depression, so now there was a
new effort to bring the whole process of bankruptcy under a Federal law.
It was urged that the eagle of prosperity, having soared, "has since fallen,
with broken pinions, to the earth". Many had failed, through no fault
of theirs. Only men with hearts of stone, who want their pound of flesh,
oppose this reform, as they have also opposed the abolition of imprisonment for debt. "Such men were born an age too late." 51
First offered as an emergency measure by the Van Buren administration, the Federal bankruptcy bill was held up until 1841. It was then
revived under Whig auspices and passed, but was repealed in the following year. It lasted long enough, however, to afford a large measure
of relief; according to one estimate, twenty-eight thousand debtors freed
themselves from nearly a half billion dollars of debt at an average cost
of little more than ten per cent in assets surrenderedP2
Still another question affecting debtors, theoretically if not practically,
aroused considerable controversy at this time. The New York legislature
rejected a proposal to repeal the existing usury laws and, in fact, adopted
a more stringent act in 1837. In the discussion which accompanied it,
credit was given primarily to a timely pamphlet by John Whipple, who
refuted Jeremy Bentham's Defence of Usury. Whipple's essay became
the classic American defense of the usury laws, and was reprinted during
later periods of depression. Whipple warned that free trade in money
would lead to extortion, and "if we do not in twenty years produce a
revoiution against property, then there is nothing in history and experie n ~ e " . In
~ ~1840 the attack on the usury laws spread to Massachusetts
and Pennsylvania, where it was argued that free trade in money was
most needed in hard times in order to ease credit; otherwise the industrious person was driven to the usurer. Unfortunately, however, the
[American community had] a strange and mawkish sensibility for every
rogue who comes under the lash of the law . . . and for every debtor who is
pressed for the performance of his promises. The ingenuity of the present
time is exerted to prevent murderers and robbers from being made too
60 N e w Yorkev, June 17, 1837; Feb. 16, 1839; ( h c i n n a t i Daily Gazette, Mar. 26, 1838:
Kendull's Expositor, Mar. 17, 1841; /ournu1 o f Co nnzerce, Apr. 25, 29, 1840; Merchants'
Magazine, IV (Jan., June, 1841), 73, 544; Constituttonal Reform, p. 13, McMaster, VII, 153.
5 1 Merchants' Magazine, IV (Jan., I 841), 26 ff., 33.
52Ibid., I (Dec., 1839), 501; XXXVII (Dec. 1857), 675; New Yorker, May 30, 1840;
McMaster, VII, 48.
j3 N e w Yorker, Jan. 28, Apr. I , 15, May 6, 1837; Leggett's Writings, 11, 275; John
Whipple, Free Trade in Money (New York, 1878), pp. I , 14.
684
Samuel R e z n e c k
uncomfortable in their confinement; and to encourage debtors in a total and
reckless disregard of their . . . engagements. . . .54
Not only genuine group needs but political partisanship as well waxed
strong in this period of depression and exploited it in the strategy of
campaigning. Already in 1838, a Whig journal, in reviewing the course
of events since Jackson had announced he was leaving the people
"prosperous and happy", reported gleefully the turn in both the economic
and political tide. Elections were everywhere going against Van Buren.
Only a complete change in the government could bring real relief, and
with this sentiment the ground was prepared for the colorful and unprecedented campaign of 1840. In the Whig victory of this year, a contemporary writer believed that the most effective cause "has undoubtedly
been the depressed prices of agricultural produce and labour". The
promise of returning prosperity was heralded in the magic slogan of
an election transparency:
Little Van's policy, fiftycents a day and French soup;
Harrison's policy, two dollars a day and roast beef.
Hope was also held out to those who still had "masses of property
bought at speculative prices . through the process of a re-inflation of
The administration, on the other hand, had spoken
the bubble .
out "in accents of severity and rebuke . . that they must resign themselves to their past losses. . . Who can be surprised at the result?" 5"
When prosperity did not come promptly, at the mere bidding of the
Whigs, they were exposed in their turn to the taunt that the promised
"better times" were actually "bitter times". Instead of roast beef and twodollar wages, it was now only "ten cents a day and bean soup". A
Democratic reaction was reported to have set in.56
In the campaign of 1840 the Whigs were charged with spending
"fabulous" sums, supplied by the banks, and used in ways "such as
history blushes to record". One of these uses was u~ldoubtedl~
a deliberate effort to woo the laborer and mechanic with such pamphlets as
"Facts for the Laboring Man. By a Laboring Man". It became the
fashion to play the democrat, and even Webster, addressing merchants
in Wall Street, was indignant that anyone should have called him an
aristocrat. At Saratoga he boasted of the ancestral log cabin in New
..
. .".
.
.
5 4 Mercharrts' Magazine, I1 (Jan., May, 1840), 30, 387 ff.; I11 (Aug., 1840), 120;
/ournu1 of Cotnmerce, Jan. 13, 1840; Whipple, pp. xiv, 3.
55 \effersonian, July 14, 21, Nov. 17, 1838; Greeley's Recollections, pp. 124 ff.;
Hone's Diary, I , 493, 512; U . S. Democratic Review, VIII (Nov., 1840). 392.
5 6 Kendull's Expositor, Oct. 6 , I 841; McMaster, VII, I ; Greeley's Recollections, p. 160.
Social H i s t o r y of a n American Depression
685
Hampshire and demanded the American standard for the laborer."
With some inconsistency, therefore, the same Whig pamphleteer who
courted the laborer and debtor in his Crisis of the Country, also dragged
the red herring of Jacobinism across the political trail in his Sequel to
the Crisis. Already in 1838 Greeley had issued a warning against the
recent increase of converts to "ultra radicalism", and he himself was
soon .to be won over to Albert Brisbane's version of Fourierism and social
reform. In 1840, however, it was charged that not only had the administration nearly broken "the spirits of the most elastic and buoyant people
on earth . . . but civilization itself
.is to be broken down, and Christianity rooted from the land!"58
The provocation to this indictment came from an article in a current
periodical which contained one of the earliest and most trenchant statements of the doctrine of class conflict ever made in this country. Its
author, Brownson, whose tortuous career was to run from radicalism
to reaction, later defended himself that, "born and reared in the class
of proletaries", he had only said what he knew and felt, and would
stand by it, "at least, until the laboring classes . . rise up and accuse us
of misrepresenting them". His purpose had been to explode certain
American myths. One was that in America every man may become
rich, but nobody has grown rich by his own labor. Somewhat prematurely, Brownson announced that "the wilderness has receded, and
already the new lands are beyond the reach of. the mere laborer, and
the employer has him at his mercy". Precisely at this time George Evans
was beginning his agrarian agitation for free land, which was to culminate in the Homestead Act. Brownson also insisted that to the worker
bread was more important than Channing's program of education an'tl
moral elevation. "It is no pleasant thing to go seeking work and finding
none . ". Priests and pedagogues have had their chance and can do
nothing. "They merely cry peace, peace, and that too when there is no
peace, and can be none." The master too is "in these times. . . shedding
crocodile tears over the deplorable condition of the poor laborer, while
. And so, finally, "YO'U
he docks his wages twenty-five per cent
must abolish the system or accept its consequences".
..
.
. .
. . ".
57 Benton's View, 11, 205; Arctarus, I (Jan., 1 8 4 1 ) ~75 ff., Scioto Gazette, Sept. 20,
1838; A. B. Norton, Reminiscences of the Log Cabin Campaign (Mount Vernon, 1888),
p. 322; Mr. Webster's Speech at Saratoga (Boston, 1 8 4 0 ) ~pp. 3 ff.
5 s N e w Yorker, Oct. 6 , 1838; Greeley's RecoNections, p. 145; Sotheran, Horace
Greeley, p. 121; Junius, T h e Sequel to the Crisis (New York, 1840), p. r ; Norton, p. 242.
C f . Greeley's plaint against the "Croaking Cosmopolites", always "sneering at the patriotic
feeling of (Americans)", and predicting the "downfall of her institutions" ( N e w Yorker,
Feb. 15, 1840).
686
Samuel Rezneck
[But it will not be done] without war and bloodshed. We or our children
will have to meet this crisis. The old war between the King and the Barons
is well nigh ended, and so is that between the Barons and the Manufacturers . . . and now commences the new struggle between the operative and
the employer, between wealth and labor. What or when the end will be
only God knows.59
I n a second article Brownson enlarged upon the idea of change by
violence. While he hoped his prophecy might prove to be false, he,
nevertheless, believed that
If a general war should now break out, it will involve all quarters of the
globe, and it will be in the end more than a war between nations. It will
resolve itself into a social war, a war between . . . the people and their masters.
It will be a terrible war! Already does it lower on the horizon. . . . Stay it,
ye who can.60
While less extreme, the Workingmen of Charlestown, Massachusetts,
were addressing similar warnings "to their Brethren throughout the
Union". Their distress was due to the paradox of a n overproduction
which forced their wages down. There was nothing to hope for from
the politicians or the reformers. "Our salvation must . come from
ourselves." T h e workers must organize and become a power in the
state.61 In this respect also Brownson offered the workers practical
political advice. T h e election of 1840 had been a victory for property;
the party of 'Man' could not prevail over property unless it took advantage
of the division in the opposite camp. He, therefore, urged a political
union of labor with the Slave South, on the basis of a strict constitutionalism. Now, more than ever, was the time to rally to the ultimate goal
of abolishing the "proletaries" and establishing equality. Brownson
censured "the laissez-faire doctrine, so much in vogue . . .". But the
state, rather than the Federal government, must be relied upon to "maintain between all the members of society that equality . . . which docs
not exist among men by nature".62
T h e decade of the 1840's passed beyond such doctrines and eventually
plunged into Utopian thought and experimentation. These included
among others, agrarianism and Fourierism, as well as an elaborate, if
embryonic, proposal for a kind of social planning, on a national scale,
which the author, Clinton Roosevelt, presented as The Science of Gov-
..
59 Comnlons, History of Labour, I , 522;. Boston Quarterly Review, 111 (July and
Oct., 1840), 362 ff., 460.
60 Boston Quarterly Review, 111, 508.
Ibid., IV (Jan., 1841), I 19 ff.
s2 Brownson, Our Future Policy, pp. r o ff.
Social H i s t o r y of an American Depression
687
e ~ n r n e n t .All
~ ~ these belong, of course, to another and a different theme,
and yet cannot wholly be separated from the background of preceding
depression. The latter had begun in 1837 when the pressure of an inflated
prosperity proved too great, and certain strains and stresses developed
in the American economic and social structure. The immedia'te and
acute emergency created the need for repair work, which was supplied
by a mass of relief legislation. But depression was also reflected in the
thought and action of both classes and masses. It produced a harvest of
ideas which seem not so much immature as premature, at least when
a more normal state of social well-being was restored. They perhaps
brought a forewarning of America's later ripening and aging. Certainly there was more romance than reality in the reminiscence of one
who harked back to this very period as one "of innocence and integrity ...
and equality . when there were no millionaires and no Standard Oil
or other combines. . . . When the rich helped the poor, and the poor
helped the great." 64
SAMUEL
REZNECK.
Rensselmr Polytechnic Institt~te.
..
63
Byrdsall, p. 92; Clinton Roosevelt, T h e Science of Government (New York, 1841).
passim.
64
Norton, p. 15.
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The Social History of an American Depression, 1837-1843
Samuel Rezneck
The American Historical Review, Vol. 40, No. 4. (Jul., 1935), pp. 662-687.
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Wholesale Prices in the United States, 1825-45
Arthur H. Cole
The Review of Economic Statistics, Vol. 8, No. 2. (Apr., 1926), pp. 69-84.
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